FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[Midas79]

@WB_fan

 

I do agree that the central question is about the timing and amount of FnF's third-party capital raise(s). Following is the reasoning I posted on another board. Right now I'll use the assumptions that FnF need to hit $235B in core capital at the end of 2025, that the seniors are cancelled/converted, and that they earn $20B per year. Without the seniors their core capital right now is around $35B. That leaves $100B of common shares to be sold some time between now and the end of 2025.

 

Note: with the current capital rule FnF's 4% with-buffers core capital standard, which is a percentage of total assets, would be around $300B at an annual asset growth rate of 2.5%. Thus my assumptions include a 22% reduction in the capital requirements. Consider the following three scenarios:

 

1) FnF raise $100B immediately. Their core capital levels are $135/155/175/195/215/235B at the end of 2020-2025.

2) FnF raise $20B per year. Capital levels of $35/75/115/155/195/235B.

3) FnF raise $100B five years from now. $35/55/75/95/115/235B.

 

It is clear that #1 dominates #2, which in turn dominates #3. At every moment in time, more capital is better than less capital. Period. This remains true even if you tweak the assumptions above.

 

I have heard the argument made before that FnF have operated with little to no capital for 12 years so what's the rush? My response is summed up well by this tweet:

https://twitter.com/the_CMLA/status/1339600322046513160

 

Should we just wait for retained earnings to build?  Small lenders say no, because in the YEARS it takes to get there, a large negative economic event CAN and WILL happen, depleting the inadequate capital & destabilizing the entire US secondary, which in turn harms taxpayers

 

In conservatorship and with the NWS in place, the government both has control over FnF and rights to all its profits, while taking all the risk. But FnF are meant to be private, shareholder-owned companies, and there is no point to having shareholders if they gain no economic benefits from their shares. A permanent nationalization truly would consolidate FnF onto the government's balance sheet, an outcome everybody involved wants to avoid. If Treasury wants to remove that risk to the taxpayer, they must get private capital involved, and the sooner the better.

 

Calabria has also said that FnF will go under in a severe economic downturn. In the end, I see no reason not to raise capital ASAP and in as large amounts as the market will support. The only ones who benefit from a slow, earnings-only capital raise are existing commons, who have nobody on their side except maybe Treasury due to the warrants, and Treasury has enough ways to make money here that they aren't going to try to maximize the value of just the warrants, especially if they give up the seniors.

 

To the rest of your points:

 

[*]COBFInfinity summed up my feelings on dividends nicely. FnF need a ton of outside capital, and restricting the investor pool by not offering dividends is unwise, if it's even possible. Not to mention the facts that the offering price of the commons will be lower than it otherwise would be if there were dividends. The same is true for an early junior conversion: if one doesn't happen immediately, there will have to be $33B more of commons raised later than if the conversion does happen first. That future dilution risk will be factored into the offering price.

[*]In a low-interest rate environment, I fully expect any FnF junior pref share with a div rate of at least 5% or so to trade at >=120% of par once dividends are turned on. Even discounted back 3 years that's at least 80% of par. The choice on whether to own the commons or juniors now is based on the prices of each at the time of the first share offering, and is answered simply by whether you think the pref:common ratio will be greater then than it is now. If yes, own prefs, it no, own commons. If you think it will be close own both, though I'd still weight towards prefs due to my opinion that they have less downside. It doesn't matter what the commons do later because the juniors could just convert in the open market at the time of the first capital raise. For the commons to be a better buy (and hold) right now they will have to hit at least $6 or so (and that's with no immediate divs or conversion) when everything is announced and stay there (because short-term irrational exuberance could push it above there temporarily but we're talking long-term value). I don't think there's enough future upside to the commons at $6 for them to stay there for long.

[*]The retained earnings from the last year do count as capital because of the way capital is calculated. Core capital is balance sheet equity minus the seniors and minus AOCI (a rounding error). The concomitant increases in senior liquidation preference don't change that because they don't show up on the balance sheet. And weren't you the one saying liquidation preference doesn't matter outside actual liquidation? If so, why do last year's earnings not count for raising the common share price but future ones will?

[*]Your argument that Calabria won't allow dividends, even though he specifically included the possibility of exceptions to the dividend restrictions in his capital rule for the purposes of raising capital (thus showing that he thinks immediate or near-immediate dividends will be necessary to raise capital), conflicts with your argument that he won't push for a third-party capital raise ASAP. If the purpose of keeping divs off is to build capital faster, why unnecessarily delay third-party capital raises?

[*]The seniors are already repayable upon the issuance of capital stock. In fact the paydown would be mandatory. The problem is that in your scenario of the seniors staying in place (though becoming non-cumulative), the first $193B FnF raise would have to go towards paying off the seniors and thus wouldn't build capital at all. Raising that much equity, which would have to be all common shares, would cause a crazy amount of dilution in and of itself. $193B is already 80% or so of the future market cap, so the investors will want even more. Add in Treasury exercising the warrants first and you're looking at the existing commons having low single-digit % of the overall equity in the end. This scenario likely leads to the commons being worth less per share than they are now.

[*]Your idea that some FnF debt could be exchanged for equity is something I hadn't considered. It certainly would raise capital, though again it would have to be for common shares only because the juniors take up all the available room for non-cumulative prefs in Calabria's capital rule. It's hard to say how this would affect the price, but corporate debt investors, especially in companies as safe as FnF, are unlikely imo to take the risk of owning common shares unless they are richly compensated, resulting in more dilution to the existing commons than just doing a public offering.

[*]If Treasury does what I expect and takes actions that will allow third-party capital to be raised, they will be out of the loop in terms of capital raise timing. That's the whole point of getting this done before Yellen takes over: neither Calabria nor Mnuchin want her to be able to stop the recap and release process. Then it becomes only Calabria's call as to how soon to raise capital, and he has said in interviews he wants it done sooner rather than later.

[*]This shows the difference between Calabria and Mnuchin in terms of capital raise urgency. Mnuchin has an incentive for third-party capital to be raised sooner due to taxpayer protection, but the housing market has been robust enough during Calabria's term that he hasn't had to worry about FnF going under, especially with the increased capital levels due to the letter agreements. He has also had a ton else on his plate. Calabria, on the other hand, has been very outspoken about FnF's lack of adequate capital and the need to build it. The only reason he hasn't had FnF do capital raises already is that the conditions that would allow that have not been in place (NWS, seniors). He even said that he would have wanted FnF to do huge capital raises earlier this year but it just wasn't possible at that time. Once Calabria is free to determine how fast FnF raise third-party capital, I believe he will push for (and get because he's the FHFA director) the largest possible raises ASAP. No self-proclaimed safety and soundness regulator would do otherwise.

[typicalvalue]

Calabria interviewed on Friday the 22nd of Jan. Sure will be talking about a failed attempt to recap the GSE's (for those that are doubting a  PSPA amendment *kidding*)

 

https://www.crefc.org/cre/content/events/January-Conference/2021/January_Conference_2021.aspx?WebsiteKey=105b6c32-4dc8-4e9f-8ba4-8b92bdce1c9e&CCOMain=2&_zs=axRfO1&_zl=O1K56&DC_Symposium=3#DC_Symposium

 

Also, Mnuchin on travel until the 10th of this month, so I don't see it happening this week

[COBFInfinity]

Calabria interviewed on Friday the 22nd of Jan. Sure will be talking about a failed attempt to recap the GSE's (for those that are doubting a  PSPA amendment *kidding*)

 

https://www.crefc.org/cre/content/events/January-Conference/2021/January_Conference_2021.aspx?WebsiteKey=105b6c32-4dc8-4e9f-8ba4-8b92bdce1c9e&CCOMain=2&_zs=axRfO1&_zl=O1K56&DC_Symposium=3#DC_Symposium

 

Also, Mnuchin on travel until the 10th of this month, so I don't see it happening this week

 

That's at least two interviews Calabria has lined up for the next 3 weeks, the other being with Tim Rood. It sure does look like a signal that he wants to talk about something positive. If not, he would just take a call on Jan 20 from WSJ or Bloomberg and explain that Mnuchin didn't want to play ball anymore.

 

But yet again, Mr. Market says F your wishful thinking and sends the preferreds a few percent lower.

[Spekulatius]

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

[COBFInfinity]

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

[Spekulatius]

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

[COBFInfinity]

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

No, January 20 is clearly Steve Mnuchin's deadline, not mine, and he started talking about ending the conservatorships before he even started the job 4 years ago. If he had no interest in actually doing something, why did he bring it up then and then keep telling everyone for 4 years that he wanted it to happen? Now, I don't believe he's going to give investors anywhere near what they hoped for, but he can do enough to set the path for a recap to occur. We'll all find out soon enough.

[Jcmeg35]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

[muscleman]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

[typicalvalue]

Mr. Market agrees with all of you guys, maybe im hopeless but still time.

[beaufort]

It's possible that nothing happens or that what happens is underwhelming; some agree with the likes of MM on that point.  But there are some of us that don't think that's is probable and vote with our wallet.  I bought more FNMAT this morning for 6.55.  This is why we have a market.  I don't think the volume says anything right now, but I am not a 'technician'.

[DocSnowball]

Staying the course as well. Not sure what else to say. Either this moves dramatically in the next couple of weeks, or the hemorrhage continues. Eventually, either there is restructuring or a taking due to nationalization. It is a volatile investment, but the discrete events in 2020 have moved us forward rather than take us back. Thesis creep and sunk costs are also into play for sure, need to acknowledge that and not invest any more $ at this point.

 

If you are Calabria, what are you asking Mnuchin to do at this point before the balance of power shifts?

[COBFInfinity]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

[Guest cherzeca]

SM said most recently, publicly, that it is likely they will put GSEs on a path to recap.  I believe that is very close to verbatim. now privately, who knows what is going on. counterintuitively, D control of senate may add to reasons SM will act

[orthopa]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Wow, yeah I didnt realize congress controlled this investment. Great point. Thank god your around muscleman.

[COBFInfinity]

As a reminder, not EVERYTHING is based on Mnuchin. Spike in interest rates will reduce refi activity, reducing GSE profits. Price drop may not be unreasonable based on that.

[Wiggins]

buying opportunity today

[Spekulatius]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Which will most likely promptly reversed 2 weeks later.

 

Just a general observation from binary net situations, I have found that in most cases absent much indications of progress and with deadlines approaching these often trade on more hope than facts. I guess we will know in two weeks.

[Guest cherzeca]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Which will most likely promptly reversed 2 weeks later.

 

Just a general observation from binary net situations, I have found that in most cases absent much indications of progress and with deadlines approaching these often trade on more hope than facts. I guess we will know in two weeks.

 

there is no deadline here, spek. you are a casual observer, saying that the lawsuits have gone nowhere.  you are just fanning fumes

[WB_fan82]

My understanding is that PSPA changes cannot just be reversed two weeks later.  It's an agreement between the TSY/GSEs/FHFA.

 

You need both TSY and FHFA as conservator to agree to change it back.  That would likely require a confirmed Calabria replacement.

[muscleman]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Investing is a probability game. What do you think is the likelihood of this? My assigned probability is 0.0005%

 

[orthopa]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Which will most likely promptly reversed 2 weeks later.

 

Just a general observation from binary net situations, I have found that in most cases absent much indications of progress and with deadlines approaching these often trade on more hope than facts. I guess we will know in two weeks.

 

to piggy back on cherzeca the more you post spek the more it shows how much about this you don't know ruining any credibility you could muster in the last 2 weeks here. Fanning flames is fine I guess, but with your level of understanding of the last 10 years coming down to the next two weeks it might be best to just read along and jeer at the end if this blows up. Its painful to read what you have been typing.

 

 

[orthopa]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Investing is a probability game. What do you think is the likelihood of this? My assigned probability is 0.0005%

 

Which is pari passu with your level of understanding the intricacy's of this investment. I think you got lost in the wrong thread again.

[TwoCitiesCapital]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Investing is a probability game. What do you think is the likelihood of this? My assigned probability is 0.0005%

 

Which is pari passu with your level of understanding the intricacy's of this investment. I think you got lost in the wrong thread again.

 

Guys - I really appreciate your contributions to this thread, but personal attacks like this aren't necessary and take away fro the thread as a whole.

 

If you don't like them, hit the ignore button and let the rest of us judge for ourselves or counter their opinions in a respectful manner.

[Guest cherzeca]

of course you are right, two cities, but I have a problem with casual observers who post on this thread to discredit a JP GSE investment without taking the trouble to understand one iota of the very complex merits. what is the purpose or the objective of doing so?